An Interview With Manuel Quesada

The head of Manufactura de Tabacos S.A. (Matasa), makers of Fonseca, Cubita and other cigars.

In June 1974, Manuel Quesada, his brother Alvaro and their father, Manuel Sr., opened a cigar factory called Manufactura de Tabacos S.A. (Matasa) in Santiago, Dominican Republic. The Quesada family had worked with tobacco since the late 1800s in Cuba, but this was its first venture into cigar making. At the time, Dominican cigars were virtually unknown in the cigar world, but Matasa grew from making thousands of cigars a year to millions, thanks to the popularity of house brands such as Fonseca and Cubita, as well as a host of brands made under contract for other companies importing cigars to the United States.

Manuel Quesada, 57, visited the New York City offices of Cigar Aficionado in February to talk about his 30 years in business with senior editor David Savona, and to discuss his greatest challenge ever, dealing with the tragic accident that claimed the lives of his brother, nephew and right-hand man.

David Savona: This is a big year for you, 2004.

Quesada: Thirty years.

Q: Tell us about the history of Matasa. What month was it founded?

A: June ,74, with $100, a chair and a phone.

Q: You and your father?

A: We were running the leaf business, so I sort of moved over from the leaf business to start a factory. But my brother had come back already from college and the seminary.

Q: Why begin making cigars in the Dominican Republic?

A: In Miami, the cigarmakers that had come out of Cuba were getting older, and with the Social Security a lot of them had to be paid under the table, and it started to become a hassle. The free zones had just started in the Dominican Republic. So it was a good idea to transfer production from Miami to the Dominican Republic. In the Dominican Republic at the time, even though it didn't have a cigar history of exports, it did have a local cigar history. But for exports, nobody had thought about it, except, of course, Consolidated, which had already started in La Romana.

Q: So when you started in the Santiago free zone, was there any other cigar factory there?

A: Nobody in the free zone. The free zones started in ,72, and the first free zone to open was in La Romana.

Q: When did Santiago's free zone open?

A: Seventy-four. The building where we are is where [then president Joaquin] Balaguer inaugurated the free zone of Santiago. Our building was used for the ceremony, and right after the ceremony, we moved in.

Q: What other companies were there?

A: There were three buildings. Ours was in the middle.

Q: That was it?

A: That was it.

Q: Today it's so large. You must look at it now and say, "My God, I don't even recognize this place."

A: There are 45,000 or 47,000 people working in the free zone. There aren't many towns in the Dominican Republic that have as many

people as the free zone has.

Q: And when it opened?

A: When we started the factory, there may have been a couple hundred people working.

Q: How many rollers did you have at the beginning?

A: Three. We started by trying to hire some people, but they had all kinds of ideas. They thought that they were worth more than they were really worth. So we decided to train. And we started teaching people with a Cuban guy that we had brought in from Miami. Espinosa was his name. And he was in charge of teaching the cigarmakers. I would case and strip and prepare the leaf and do everything for him.

Q: I guess there wasn't a lot of tobacco for you to get ready for just three rollers.

A: Yeah, so I would do all of that, and he would take care of making the cigars.

Q: What brands did you begin with?

A: Ah, we had Sosa and Fonseca.

Q: How many cigars did you make in the first year?

A: Oh, heavens! Twenty thousand.

Q: Could you be a viable business at that level?

A: Well, it was being supported by the leaf business at the time, because we were getting started. We had to buy a whole bunch of equipment, molds, and buy some tobacco, and the wrapper, binders, and so on. It was a very meager and very humble start. And difficult, because nobody knew the Dominican Republic blend.

Q: Was there ever a time when the cigar business looked a little bit dicey, when you thought this might not work?

A: Quite so. In the ,80s, it was doldrums. It was very, very slow. The leaf business was always steady because the dark cigarettes were always big in Europe.

Q: Talk about your leaf brokerage business, if that's the correct way to describe it.

A: No, it's not really a brokerage, because we buy our tobacco and then we sell it. So we become the owners of the tobacco. We used to

supply farmers with all the know-how and the money. We'd buy the tobacco, then grade it, pack it and sell it as filler for either short-fill cigars or cigarettes. And long-filler as well, because Tampa would buy a lot of long-filler. The Canary Islands would buy some long-filler. And the Dominican Republic was starting to use it more.

problems throughout the years. The Dominican Republic has had a policy of taxing exports, which is a very unusual situation, and at a time, we ran eight years with a 35 percent export tax and that took a lot of markets away. We became expensive in comparison to Colombia, to Brazil, to Paraguay, Argentina, which are the countries that compete with us.

Q: Today, is Matasa bigger than Manipuladora?

A: We're about the same, I'd say.

Q: Lets turn the clock back for a moment. Tell me what was tougher: those early years when you were struggling for business, or later when you were dealing with all the craziness during the cigar boom?

A: It was different. At the beginning, you knew more or less what your volume was. You knew more or less what your expenses were. You could program yourself. And the competition, of course, was very well established. And it wasn't an extremely lucrative business, but it was a business that you could handle. And you could program yourself and you could at least work your way into making a cigar. It was not a demanding time, because cigar smokers smoked a 4 1/2 inch by 43 ring, whatever brand, and smoked that every single day till they died. In the ,80s, cigar smokers were smoking one size and one brand because their map of preference was very narrow. That changed completely with the advent of Cigar Aficionado. In the ,90s, especially after the cigar boom, cigar smokers made their map wider by smoking more than one size and more than one brand. Of course, it flipped over the business completely.

Q: Were there introductions of new products before Cigar Aficionado?

A: Very little. Very little. You would introduce a new size, but nothing like it is today where you go to an RTDA [Retail Tobacco Dealers of America trade show] and the first sign on the door is New. Everything has to be new nowadays.

Q: In one of our earlier conversations, you told me that you're not certain the proliferation of new brands is a good thing. Could you please elaborate on that comment?

A: I don't believe it is. I don't disagree that the smoker needs a little excitement, the smoker needs a little more choice. But I think we're overdoing the choices. And in cigars, there are so many permutations and there are so many ways of blending that you can do without going into the extremes. And some of the extremes have proven successful. While there are products that I don't cotton to at all, apparently there are some smokers that want this type of choice. But if you look at the brands today, any brand has at least four or five extensions of that brand. So, it becomes diluted. Now, you're either cannibalizing your own brand or you're confusing the smoker. It's a game that we're playing that I really don't feel is sane or healthy for the industry.

Q: I'm smoking one of your regular Fonsecas: mild, medium, creamy, elegant. You have some others that have a very different flavor altogether now, right?

A: Indeed. Well, that's one of the things that, of course, [resulted from] Cigar Aficionado waking up the smokers [by saying,] "Hey, there may be more to cigar smoking than just a mild cigar," which was the standard of the industry back in the ,80s and early ,90s, until Cigar Aficionado started on the verge of kicking up the taste of cigars. And of course, all the brands have had to accommodate themselves to that. So Fonseca, in particular, has now come up with three or four extensions of different tastes and different strength levels to cater precisely to the smokers.

Q: Is Fonseca your biggest brand?

A: Yes, it is. The regular Fonseca is still the biggest seller. I still think that the average smoker out there is a middle-of-the-road smoker. It's like saying, "I will have a lobster diablo twice a day for the whole week." You can't do this. Smoking a very strong cigar that satisfies you completely cannot be a four-cigar-a-day habit. You can't do this. I can't do it, anyway.

Q: Let's talk about some of the new things you're doing. Let's actually talk about the brands that you make.

A: The factory is divided into two major divisions. One is where

we make our own brands and the other one is where we make brands under contract. And under contract we make Casa Blanca for JR, we make Licenciados for Mike's Cigars, we make Nat Shermans—some parts of the Nat Sherman brand—and we make smaller brands for small distributors. We make some cigars for Europe, as well.

The other part of the factory is where we make the brands that we sell ourselves: Cubita, Fonseca, which are the two main brands, and then we have other, smaller regional brands, which are national, but they sell more in particular pockets of the United States. We make some bundles, as well.

Q: Did you get phone calls during the cigar boom with people saying: "I need this many cigars?"

A: Oh, we had people come in with suitcases full of money, open it up and then, "Here, take it. I need cigars." At the height of the boom in ,95, all the people that were coming into the Dominican Republic were stealing from cigarmakers right and left by offering all kinds of stupid wages and offering incentives and giving loans, and it was just crazy.

So we had a meeting at Pro Cigar [the association of Dominican cigarmakers] and we said, "Guys, we either take the high road or we take the low road." Now, if we're in business for the boom, let's

take the low road and retire at the end of the boom. But if we're going to be here after the boom, we have to be very conscious of what our situation is. Because, when all of this clears, the ones

left behind are going to inherit whatever craziness was done during the boom.

If you go back to the boom and you do a study of pricing, the cheapest cigars during the boom were the Fonsecas, the Macanudos, the H. Upmanns, the Montecristos. We were selling cigars at between $5 and $7 when people were getting $12, $13, $18, $20 a cigar. Again, we had to make a choice, and we made the choice. Because we weren't there for the moment. We're here for the long run. Now, whether that's smart or dumb, I don't know.

Q: When did you realize that the craze was starting to come to an end?

A: The RTDA of ,97—I forget where it was—but we noticed that the new guys that were coming with all this, "My great-grandfather was a barber, but he lived in a place that had tobacco…," they weren't

getting all the excitement that they were getting in ,95 and ,94 and ,96. In ,98, it just stopped.

Q: So, you had some bad years after that?

A: Well, ,98 and ,99 were not happy years at all. And 2000, for that matter. Two thousand and one started to get a little better, but, then, some manufacturers continued making cheap cigars. And today that's still the case.

Q: How cheap are we talking about?

A: A quarter. Twenty-five, 30-cent cigars.

Q: How can they do that?

A: Well, anybody can do that. Anybody can do that. And it's sad, because I sat with a big wholesaler and he told me, "These are my prices: bundles or boxes, this is what I pay." I said, "I can't sell you cigars at these prices, because I'm not going to give you consistency, I'm not going to give you quality." He says, "I'm not interested in that—I want price." I said, "Well, I'm sorry. That's not the way we do things." And we still sell him some cigars, but not many, because we can't compete.

Q: So what's your opinion of the market today? And how was last year for you?

A: In conversations I've had with a number of people, the gist of last year was, if you came out in 2003 as you did in 2002, tip of the hat and you're doing great. And basically, I was a standard of last year. If 2003 was as good as 2002, you were doing good, because the first four months of 2003 were the worst four months that I've ever seen in history. Weather had much to do with it. When weather hits from Chicago to Boston and from New York to Atlanta, that's a big chunk of the market right there. That's a huge chunk of the market. The rest of the year made up for the first four months and that's why, if you came out even, you were doing very well.

Q: What about this year? Are you optimistic about the current state of the cigar market?

A: Quite so, quite so, quite so. I think it's an exciting time, because manufacturers are in a situation where they have to be creative, they have to be innovative, they have to be consistent, and it's really fun. And again, if we overdo it, if we're creating new things every two months, then we're just adding too many things into the market. And then we're not making anything stable anymore.

Q: Tell us about some of your new stronger blends.

A: Well, the Cubita SMS [Spanish Market Selection], in particular, is a rather strong cigar. And of course, it's given the smoker a totally different area to smoke in the Cubita line. For example, the regular Cubita was a little stronger than the Fonseca, but still along middle-of-the-road strength. Now the SMS brings a different level of strength and aromas and tastes into the same brand. So we have been able to capture those that are looking for something different, something more exciting, something a little heavier for a particular time of the day or week or whatever.

Q: The wrapper on that is something unusual for you, right?

A: Yes, indeed. It's a Nicaraguan criollo seed that we are purchasing from Plasencia.

Q: Now, on the inside, is there stuff that you normally maybe haven't used in the past, too, or just more ligero from the Dominican?

A: A little more ligero, yeah. And the combination makes a different cigar altogether.

Q: Is it the strongest cigar you think you make?

A: Ah, that one and the [Fonseca] Reserve…different taste, but strength level, they're more or less in the same ballpark. And we also represent Joya de Nicaragua Antaño from Nicaragua, which is a very strong cigar.

Q: Tell about that relationship a little bit.

A: Brad [Weinfeld] decided to come back into the industry, and he decided to come back with us. Brad had a great relationship with Joya, which had been rebought by Alejandro Martinez, and he was looking for a distributor in the United States, so he came to Brad, and Brad came to me. Unfortunately, the old Joya de Nicaragua had been beaten so badly that it was a difficult proposition to get it off the ground. And then Brad, who came up with the name Antaño, said, "Let's do something a little different. Let's do something a little heavier in taste." And it's quite different. Unfortunately, it's a very limited production cigar.

Q: I want to talk to you about a difficult subject. The awful day in 2002, when you lost your brother, your nephew and—

A: And Julio.

Q: And Julio Fajardo, your right-hand man. Could you talk about what happened that day?

A: I was coming back from Spain. I was in Madrid. And Julio, Alvaro and Alvarito, my nephew, wanted to go to Haiti to look at a cigarette factory, because we were involved in the purchase of a cigarette factory in the Dominican Republic. So they wanted to go to Haiti to see the cigarette factory because they wanted to go see what their capabilities were. So I'm flying back, and they were leaving that morning to go to Port-au-Prince. And coming into Santiago, it must have been 5:30, 6 o,clock. And I called my niece to find out if they had come back from Haiti. And my niece tells me, "We have no news from them. They left this morning around 11 and we haven't heard from them since."

Q: They were supposed to be back…

A: Ah, 3 o,clock, 4 o,clock. So instead of going home, I went straight to the airport because they were starting a…not a rescue operation, but a flyover to see if they could find anything. So helicopters were going out and airplanes were going out. Weather was not good that day. Visibility was not good. So they came back around 6:30 or 7 o,clock, with no news. That night, we had no news. The next morning, which is April 18, rescue operations went out again and around 2 o,clock in the afternoon they found the airplane…from the air. They saw the airplane from the air. It was unreachable because of where it was and weather. Nobody could land where it was. Finally, Friday morning, they were able to land and a rescue team had left by land to go up to the mountain and try to see firsthand what had happened. So by the time they landed, on Friday morning, and the rescue team had gotten to the place where they had seen the plane, the news came back that all the…that it had been a fatal accident. So they were able to bring the bodies back that Friday. And we buried them that Friday afternoon.

Three-quarters of the company went down that day, so I was left sort of alone. I have my daughters and my niece, but, of course, they were, at the time, and they still are, works in progress. They're young and they're learning and they're involved, but not at the level that these three…well, my brother and Julio, because my nephew was also a work in progress.

Q: How old was your nephew?

A: Twenty-four.

Q: And Julio was your right-hand man.

A: Yeah. But, fortunately—in all the bad, you can always find some good things—Julio and I had talked of bringing up people from the factory, because Julio and I could no longer be casing wrapper,

following filler, seeing what the yields were on the floor, making

sure that the blends were being properly done. So Julio had been bringing up a lady called Lourdes Veloz de Rodriguez, and my daughter Raquel, who had come back from Boston, had finished her schooling and working for David [Kitchens] at Gloucester [Street Cigars] and she had been already in the factory for about a year. So both of them were being brought up by Julio and myself into running the factory.

So, when the accident happened, we just left Lourdes and Raquel where they were, now under my supervision instead of Julio's, now [that] Julio was no longer available. And thanks to that, I was able to maintain some sort of structure in the factory and some sort of sharing of the load as far as running the factory was concerned.

Q: That must have been crippling.

A: [Sighs] It still is. It still is. Because you can't walk into the factory and not see where these people used to roam and walk and talk and do. But I told the family, "You know, the world does not stop and, unfortunately, we have to deal with this as best we can individually, but we have to move forward, because there are other responsibilities. You, as children, you're working in the company, so you're young. There has to be a future. So we have to work towards that and make do as best we can."

And thank God, we have been able to maintain ourselves in the level of quality, in the level of commitment that we had previously. And we haven't put a lot of emphasis on real growth, because we don't have the capability of duplicating, for example, our efforts. But we have been able to grow ever so slightly and maintain our position within the industry.

Losing one is a tragedy. Losing two is a huge tragedy. Losing all three is just insurmountable. It's just mind-boggling.

Q: Last week, when I was in the Dominican Republic, someone brought up how Julio had helped him in his factory.

A: Oh, Julio was a darling. Sometimes I had to tell him, you know, "Remember, they're competitors." [Laughs]. He would say, "Ah, don't worry, chief, I know what I'm doing."

Q: He called you chief.

A: Yeah, he used to call me chief. Yeah, Julio was a hell of a good man. And my brother…aw, it happens.

Q: How old is your daughter now?

A: She doesn't like for me to tell that, but she's 27.

Q: So the next generation of Quesadas…

A: And my youngest, Patricia, she's still in college, but she's also part-timing in the factory. So she's been able to help a whole lot as well. And Esther, my niece, in the leaf business—she has been running that with me as well.

Q: So you're getting by…

A: It's not easy, David. But unfortunately, it's a fact of life. I can't do anything to change this, so I have to make do.